Consumerism | - Part 3

Retail Sales Better Than Expected

The Commerce Department reported(.pdf) that U.S. retail sales rose more than forecast last month, up 0.2 percent in December after a downwardly revised gain of 0.4 percent in November, however, the multi-month trend is clearly lower as shown below.

Grocery store sales and bargain hunting amid year-end discounting at clothing stores and internet retailers drove the overall increase as auto sales fell sharply.

Sales of motor vehicles and parts fell 1.8 percent after rising 1.9 percent the month prior and, excluding autos, overall sales rose 0.7 percent in December. Excluding both automobile and gas station sales, receipts rose 0.6 percent.

Food and beverage sales led advancing categories with a gain of 2.0 percent, followed by an increase of 1.8 percent at clothing stores and 1.4 percent for nonstore retailers. Curiously, sales at electronics and appliance stores fell 2.5 percent last month after dropping 2.1 percent the month prior and this category is now down 1.4 percent from a year ago.

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Less Christmas Cheer this Year?

For a data series such as this, it’s important to remember that Americans often say and do two completely different things, but the latest Gallup survey on consumer moods shows that the fast-approaching holiday shopping season may be less than stellar.

Consumer confidence had been rebounding quickly following another kick-the-can-down-the-road solution to the nation’s budget troubles last month, but ongoing difficulties with the Obamacare roll-out may leave confidence lower than where it was in the summer.

Of course, none of this may affect how much money Americans actually spend this year, particularly those at higher income/asset levels who have been watching the numbers on their financial statements get bigger and bigger each month.

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Declining Auto Sales Push Retail Sales Lower

The Commerce Department reported(.pdf) that retail sales fell 0.1 percent in September after a gain of 0.2 percent in August as a sharp decline in auto sales more than offset other gains. Excluding autos, sales rose 0.4 percent after a gain of 0.1 percent the month prior.

On a year-over-year basis, overall retail sales rose just 3.2 percent, equaling the level of March that marked the weakest annual rate since August 2010.

Retail Sales

Autos sales fell 2.4 percent after surging 5.8 percent the month prior and, along with clothing store sales (-0.5%) and miscellaneous store sales (-1.2%), this was one of only three major categories to indicate declines.

Sales at grocery stores and restaurants/bars rose 0.9 percent to lead the advancing categories as other gains were more modest, not nearly enough to offset the big decline in sales of trucks and automobiles.

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Consumer Sentiment Drops to 9-Month Low

Though not as bad as the latest Gallup survey on the American mood noted here the other day, the Reuters/University of Michigan consumer sentiment index fell to its lowest level since January, down from 77.5 in September to 75.2 in the first of two readings for October.

The fiscal mess in Washington that now includes a government shutdown along with a looming debt ceiling crisis were the the proximate causes of the most recent decline, as similar events in mid-2011 and late-2012 also led to sagging confidence as shown below.

Consumer sentiment

Surprisingly, the current conditions index edged up, from 92.6 in September to 92.8 in October, but the expectations component fell from 67.8 to 63.9, its lowest level of the year.

The 12-month outlook continued its recent free-fall, tumbling another 15 points to just 71, its lowest level since December 2011 just after the last debt ceiling crisis. This gauge of Americans’ long-term outlook was over 100 as recently as a few months ago.

Survey director Richard Curtin noted:

Consumer confidence posted a surprisingly small decline in early October despite widespread awareness of the government shutdown. The muted response may be due to consumers giving progressively less credence to the economic scare tactics that have framed the debates over the past few years

To be sure, this can quickly change if the impasse continues.

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